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tion, and not of articles destined to enter into the construction of public works or permanent improvements.

Assuming, therefore, the fact, of which assuredly there cannot be even the shadow of a doubt, that the Americans have latterly overtraded to an almost unprecedented extent,-we have next to enquire into the causes of this overtrading, and consequently of the embarrassment and bankruptcy which have necessarily resulted from it.

These causes may be divided into two great classes-those peculiar to America and those peculiar to England.

I. It is not necessary, in reviewing the causes of the overtrading in America, that we should enter into any details with respect to the struggle between General Jackson and the Bank of the United States. It is enough for our purpose to observe, that Government did every thing possible, first, to damage the credit and influence, and then to extinguish that great establishment. In this view, it withdrew from it, in June 1833, the deposits of public money; and it succeeded in the end, despite the most formidable opposition in preventing the renewal of its charter. It is true that it has since been rechartered by the State of Pennsylvania, but this only renders it a State, and not a National bank. It can no longer establish branches in other States; and being deprived of the deposits of public money, and of the consideration attached to it as a national institution, its influence in the Union has been greatly diminished. Now, we are disposed to look upon this as a very great evil. While the Bank of the United States had branches diffused all over the Union, its notes formed a sort of national currency; and its great capital, and the skill with which it was managed, gave it much consideration, and made it difficult for inferior notes to circulate in company with its paper. In this way it operated as a powerful check on the injudicious or dishonest proceedings of other banks;-putting, as M. Chevalier has truly stated, a bridle upon their abuses, and limiting, if it did not altogether repress them. (Lettres sur l'Amérique du Nord, Letter 4.)

But after the deposits had been withdrawn from the United States Bank, and it became extremely probable that General Jackson would succeed in entirely subverting the institution, a new state of things began. The persecuted establishment lost consideration and power, while, by distributing the public deposits among from sixty to seventy private banks, Government powerfully stimulated that mania for Joint-Stock Banking that has always prevailed to a less or greater extent in America. We do not suppose that General Jackson and the Government párty wished to do this; but such was the necessary effect of their


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measures against the United States Bank; their influence in this respect being only in a very small degree counteracted by the regulations laid down as to the conduct of the pet banks,' as those were termed, to which the deposits were intrusted. In consequence, the mania for new banks went hand in hand with that for railroads. On the 1st of January, 1830, there were in the Union (excluding the Bank of the United States) 329 private banks, having, or professing to have, a capital of 110,192,268 dollars. In June, 1834, the number of private banks had increased to 506, and their capital to 170,123,788 dollars. In the short interval between June, 1834, and January, 1835, no fewer than fifty-six new banks were founded, with a capital of above twenty-four million dollars; and this excessive débordement, as it is expressively termed by M. Chevalier, continued down to July; -new banks springing up like mushrooms in every village throughout the Union, until they formed a grand total of about 700 banks, independent of vast numbers of branches. They had, according to their own statement-which is, however, believed to be very much within the mark-advanced, at that period, the enormous sum of about 600,000,000 dollars, or L.120,000,000 sterling, in loans and discounts!

America being a country with every facility for the ready and profitable investment of capital, and her people being eminently distinguished for their adventurous, speculative spirit, we need not certainly be surprised that this inundation of banks, all issuing notes, and discounting recklessly, should have powerfully stimulated the existing and, as it were, constitutional tendency to speculation; and that every sort of overtrading should have prevailed in the Union. All sorts of produce rose rapidly in price. The middlemen who bought goods from the importers for distribution in the interior, and the shopkeepers who purchased from the middlemen, having unusual facilities for getting credit, rapidly extended their engagements, and augmented their stocks; and hence it is, that, notwithstanding the vast increase of imports, there was no considerable accumulation of stocks in the Atlantic cities, but that the excess was distributed over every part of the country, and consequently escaped the notice of the inattentive observer. To such an extent was speculation carried, that in 1836 the legislature of the state of New York incorporated no fewer than forty-two railway companies, some of them with immense capitals. There grew up, at the same time, a most extraordinary rage for purchasing public lands and building situations, the price of both being, in consequence, elevated far above its natural level. The extent to which this mania was carried may be inferred from the fact, that in 1833 the

revenue received by the United States Government from public lands amounted to 3,967,683 dollars; in 1834 it amounted to 4,857,600 dollars; and in 1835 it suddenly rose to treble its amount during the previous year, or to 14,757,601 dollars; showing a total rise of about 370 per cent in the brief space of three years! During the first six months of 1836, the mania went on increasing in a greatly accelerated ratio;* and it did not reach its acme till the 11th of July that year, when the President issued his famous Circular,-ordering that all payments on account of public lands should be made in specie only, or in the paper of the banks where the public lands were situated, and which should be immediately converted into specie.

Much fault has been found with General Jackson for issuing this order, though, as it appears to us, with very little reason. It must have been evident to the President, and indeed to every man of sense not engaged in the vortex of speculation, that the purchases in question could not terminate otherwise than in bankruptcy and ruin; and the thing most to be regretted is, that the order was not issued twelve months sooner, or before the evil had attained to so frightful an excess. It is, perhaps, true that it brought on the catastrophe some six months sooner than it might otherwise have occurred. But it was quite impossible that the crisis could have been long averted; and by accelerating its arrival before the mania had attained its full developement, the violence of the explosion was necessarily, in some degree, diminished. The real error of General Jackson in his policy as to' commercial affairs does not consist in his having issued this order, but in his having sacrificed the Bank of the United States. He always professed, and we believe truly, to be an enemy to the paper system, or at least to its abuse. But instead of attempting to improve it, by exerting the influence of Government to prevent the multiplication of mushroom banks in all parts of the Union, he encouraged them, and exerted himself to suppress the only institution that deserved his patronage,-that was a check on the wild and mischievous proceedings of the others, and on whose stability and good conduct the public might at all times depend. This conduct would be inexplicable, were it not that in America every thing depends on party politics,-taking the phrase in its literal and most degrading sense. The Bank of the United States incurred the hostility of the General and the democratic party,

*During the year ending 1st January, 1887, the revenue from public lands amounted to the immense sum of 23,048,029 dollars, or nearly seven times its amount in 1833.

because it was supposed to be attached to the opposite or aristocratical party. But for this circumstance, the contest between the Government and the Bank never would have been heard of; and the latter, as it deserved, would have been patronised by the President; and the multiplication of other banks of issue have been discouraged or prevented.

But, be this as it may, the Circular of the 11th of July was a death-blow to that mania for speculation which had previously been raging in various parts of the Union. The Banks in the Western and South-western States, where the public lands are principally situated, fearing a drain for bullion, began immediately to refuse their customary discounts, and to contract their engagements. It also became necessary for them,-for the speculators who had purchased public lands,-and also for the settlers who intended to occupy the latter, to provide themselves with an increased amount of specie; and, in consequence, it was conveyed away in large quantities from the Atlantic cities to the West. All parts of the Union were thus simultaneously involved in difficulties. The facilities which the Atlantic cities had previously possessed for making payments in Europe, were considerably narrowed by the forced efflux of specie to the Western States. This, however, was not the worst feature of the altered state of things. Owing to the difficulty of procuring pecuniary accommodations in the States bordering on the Mississippi,-and the fact, that almost all the interior merchants and,dealers had either speculated in public lands, or in canal and railway shares, whence they could not withdraw their capital except at an enormous loss,—most of them became unable to remit to the Atlantic cities for the goods they had so largely purchased from them; and this failure of internal remittances necessarily incapacitated all but the very richest merchants in the cities in question from remitting to Europe. The destruction of confidence and credit, with the interruption or rather total cessation of business in all parts of the Union, were the necessary results of this state of things. And thus it is, that the abuse of banking and credit in America itself, without the assistance it received from Europe, could not have failed to produce a very severe revulsion.

II. But, however signal the folly and overtrading of the Americans during the last two or three years, they have hardly exceeded, if they have not been surpassed, by what has occurred amongst ourselves. We have seen the enormous increase of the imports into the United States during the six, and especially the three years ending with 1836; and we have further seen that the exports from the United States by no means corresponded with the amount of imports-the latter having exceeded the former no

less than L.12,000,000 sterling, in 1836 only. Such being the case, it is plain that, during the last two or three years, America must have incurred, partly on stocks, bonds, &c., and partly and principally on bills and open accounts, an immense debt to the foreigner, or rather to England; we being almost the only party to whom she is under heavy obligations. This arises out of the singular circumstance, that almost the whole trade of the Union with England, as well as with India, China, and South America, has been latterly carried on upon credits obtained in England. And before proceeding farther, it may be as well, perhaps, to show the nature of those credits, and how they arose.

The export of British manufactures to the United States was formerly effected by English houses executing orders for the Americans, and transmitting the invoices and bills of lading to their agents in America; to be delivered on their receiving bank bills on Europe or other approved securities for the amount. Formerly, also, when the Americans sent ships to China and India, they put on board in the United States dollars, ginseng, and other commodities suitable for the Canton and Calcutta markets; and the ships not unfrequently touched at England in their way, and took on board British produce suitable for the same markets. These were safe and legitimate methods of carrying on trade, and had they been persevered in, or had no shipment been made, except upon security of the bills of lading, no great overtrading could have arisen.

But the increase of the trade,—the growing wealth and confidence placed in the American houses, and the natural wish of the latter to avail themselves, in as far as possible, of the command of British capital, which bore a much less rate of interest than American capital,-gradually introduced, during the last eight or ten years, and ultimately established, a more convenient and cheaper, but far less safe mode of carrying on the trade. This was brought about by the importing houses in America establishing agents in the manufacturing districts of this country, and also in the Continent, China, &c., for the purchase and shipment of products for the United States. The houses that had appointed such agents obtained, at the same time, a credit in their favour upon some one or other of the great Anglo-American houses in London or Liverpool, who allowed the agent to draw upon them for the amount of the credit by bill at four months. On the first introduction of this new system, it was customary for the English houses which had given the credits, to get the bills of lading and invoices, and to transmit them as formerly to their agents in America. But over-confidence and competition were not long in occasioning a departure from this system. It seemed

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